Govt puts three coal mines up for auction

The government had to discard the first-come-first serve basis for auctioning 2G airwaves and had to auction afresh after the Supreme Court ordered in 2012 the cancellation of 122 licences issued in 2008.

After the auction of telecom spectrum, the government has now put coal mines on the block. However, prospective bidders said that they were not enthused after the recent cancellation of 31 blocks, which have generated adverse investor sentiments.

The government had to discard the first-come-first serve basis for auctioning 2G airwaves and had to auction afresh after the Supreme Court ordered in 2012 the cancellation of 122 licences issued in 2008.

In the first-ever auction of mines, the coal ministry has invited bids for three blocks — Jhirki and Jhirki West coking coal blocks in Jharkhand (with reserves of 267.91 MT), which have been put on the block for the steel companies; Andal Babuisol at Raniganj coalfields in West Bengal (with reserves of 103.84 MT) for sponge iron units and Tokisud-II mine (127.692 MT) in Jharkhand’s South Karanpura coalfields for cement manufacturing firms.
The move to auction coal blocks had begun gathering momentum after the Comptroller and Auditor General (CAG) had drilled holes in 2012 on the coal ministry’s allocation of captive blocks to private companies, which the auditor said had bled the exchequer by Rs 1.86 lakh crore. The CBI is currently investigating the alleged irregularities and criminal conspiracy in allocation of mines since 1993 and has filed 14 FIRs so far.

Senior officials of power and steel companies were, however, not enthused by the move. “The recent spate of de-allocation of coal blocks has created an environment where the investor sentiment has been hit. Even if we bid for the blocks, where is the guarantee that we would get statutory clearances seamlessly? There is a distinct possibility that if we fail to develop the blocks then we lose the block along with the bidded money,” said Chanakya Chaudhary, director, Tata Group.

Ashok Khurana, director general of the Association of Power Producers (APP) said that the recent cancellation of 31 out of 60 blocks is bound to increase the demand-supply gap for coal. “The cancellations would only accentuate the demand-supply mismatch, which is currently around 150 MT.” However, given the paucity of the fuel, the power companies can respond to the auction offer, he said. A top government official cautioned that big players can cartelise to lap up the blocks, thereby marginalising medium and smaller players.

While auctioning is expected to eliminate favouritism in allotments, improve domestic coal output, and decrease electricity generation costs, it has to be seen weather the move helps in containing the burgeoning power prices.